This paper investigates empirically three potential drivers of financial imbalances ahead of the global financial crisis: rising global imbalances (capital flows); loose monetary policy; and inadequate supervision and regulation. We perform panel data regressions for OECD countries from 1999 to...

Recent empirical studies have shown an increasing co-movement between fund and market liquidity, which is driven by common factors such as monetary shocks. Modeling this co-movement becomes desirable to evaluate policies relating to liquidity and financial instability. This paper establishes a...

We investigate the differences in banks’ responses to monetary policy shocks across bank size, liquidity, and type, i.e., conventional versus Islamic, in Pakistan between 2002:II to 2010:I. We find that following a monetary contraction, small banks with liquid balance sheets cut their lending...

This paper outlines some issues regarding the interaction of independent fiscal authorities and one central bank in the European monetary union.It points out the possibilities for coordination failures,ranging everywhere from potentially excessive deficits and free-riding problems to...

The relevance of the Quantity Theory of Money to Developing economies is questioned. A skeptical examination of the facts upon which the theory is based, as well as of the theory itself , reveals much weakness. Indeed, it is the evidence from the developed economies that suffices to justify...

The relevance of the Quantity Theory of Money to Developing economies is questioned. A skeptical examination of the facts upon which the theory is based, as well as of the theory itself , reveals much weakness. Indeed, it is the evidence from the developed economies that suffices to justify...

This paper reviews the economic and monetary impacts of the creation of the 1979 European Monetary System on the participating countries and shows that they did not meet all the required theoretical criteria for a successful monetary integration process. Despite this handicap, the 1979 monetary...

A number of economists, following Professor Hans-Werner SINN, President of the Munich Institut für Wirtschaftsforschung (Ifo), have opened a debate on the true significance and the risks entailed by the system of compensation operating within the Eurozone, TARGET2 (Trans-European Automated...

This paper examines the implications of a currency union for monetary policy. The formation of a currency union worsens the inflation-unemployment tradeoff, so that leaving the inflation target unchanged at its pre-currency union level generates increased unemployment. Geographically based...